Greetings, and welcome to the Carnival Corporation and PLC Fourth Quarter 2024 Earnings Conference Call. At this time, all participants are in a listen-only mode. If anyone should require operator assistance, you may be placed into the question queue at any time by pressing star one on your telephone keypad. We ask that you please limit yourselves to one question, one follow-up, then return to the queue. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Beth Roberts, Senior Vice President, Investor Relations. Go ahead, Beth.

Thank you. Good morning, and welcome to our fourth quarter 2024 earnings conference call. I'm joined today by our CEO, Josh Weinstein, our Chief Financial Officer, David Bernstein, and our chair, Mickey Harrison. Before we begin, please note that some of our remarks on this call will be forward-looking. Therefore, I will refer you to the forward-looking statement in today's press release. All references to ticket prices, net per diems, net yields, and adjusted cruise costs without fuel will be in constant currency unless otherwise stated. References to per diems and yields will be on a net basis. Our comments may also reference cruise costs without fuel, EBITDA, net income, free cash flow, and ROIC, all of which will be on an adjusted basis unless otherwise stated. All these references are non-GAAP financial measures defined in our earnings press release. A reconciliation to the most directly comparable U.S. GAAP financial measures and other associated disclosures are also contained in our earnings press release and in our investor presentation. Please visit our corporate website where our earnings press release and investor presentation can be found. With that, I'd like to turn the call over to Josh.

Thanks, Beth. We had a strong finish to an incredibly strong year. And right off the bat, I'd like to thank the efforts of our hardworking and dedicated team, the best in all of travel and leisure. They have delivered results that consistently outperformed even my own high expectations. Our global portfolio is clearly firing on all cylinders, and I am very proud of what we've been able to accomplish together. We delivered another stellar quarter to close out a phenomenal year. In fact, this was our seventh consecutive quarter achieving record revenues alongside favorable forward indicators like record booking trends and record customer deposits, indicating a continuation of the strong momentum we've been experiencing for the last two years. Fourth quarter net income improved by over $250 million year-over-year, coming in over $125 million better than expected. The outperformance was up and down the P&L and driven by strong closing demand across the portfolio, which pushed yields, per diems, EBITDA, and operating income all to new highs this year. Full-year revenues hit an all-time high of $25 billion and produced all-time high cash from operations of almost $6 billion. Robust demand delivered a full-year 2024 yield increase of 11%, with the majority of the increase attributable to higher prices. Yields finished the year nearly 250 basis points better than our original guidance, driven by a strong demand environment that we elevated throughout the year. Encouragingly, this was broad-based. For 2024, prices were up in all of our major brands and trades between mid-single-digit to mid-teen percentages. And on top of this, onboard spending levels actually accelerated sequentially each quarter throughout the year. Additionally, unit cost came in 100 basis points better than our original guidance for the year as we identified and executed upon additional cost savings initiatives and saw the benefit of an easing inflationary environment. All of this translated to an additional $700 million pickup to the bottom line compared to our December guidance and step-change improvements in our two financial metrics that form part of our 2026 sea change targets: EBITDA per ALBD and ROIC. After just one year down with two to go, we're already over 80% of the way toward achieving both of these targets, calling for a 50% increase in EBITDA per ALBD from our 2023 starting point and an ROIC of 12%, both of which would be the highest the company has seen in almost 20 years. And with ROIC ending 2024 at 11%, comfortably above our cost of capital, we're already delivering long-term value for our shareholders as we lay the foundation we'll build upon in 2025 and beyond. At the outset, and with about two-thirds of the year already on the books, 2025 is shaping up to be another banner year, with yield growth exceeding 4%, far outpacing historical growth rates and again exceeding unit cost growth, delivering more than $400 million incrementally to the bottom line. In fact, booking trends even accelerated during the quarter. Despite less inventory for sale as compared to the same time last year, 2025 booking volumes over the quarter were actually higher year-on-year at higher prices for each quarter, including the period leading up to the election. Booking volumes for 2026 also continue to break records, reflecting sustained demand even for further out sailings. The ongoing strength in demand reinforced our record-breaking book position. Both price and occupancy are higher for each of the four quarters of 2025, and we managed to increase both our price and occupancy advantage for our 2025 book position thanks to our outstanding efforts this past quarter. I can actually now report that our North American and European segments are each at their longest advanced booking windows on record. All core deployments are also better booked at higher prices than the record levels we achieved at the same time last year. So with a good amount less inventory to sell for 2025, I cannot stress enough to our customers and trade partners that if you want to sail with us this year, book now while there's still space available. And keep in mind, our 2024 results and booked position for future sailings are being driven by improved operational execution across our brands and are essentially on a same-ship basis. Now don't get me wrong. New ships are great. In fact, we welcomed three amazing new ships in 2024. Carnival Jubilee, the third of five XL class vessels for Carnival Cruise Line, is proudly sailing out of the great state of Texas. Some Princess Cruises' next-generation flagship was just awarded Conde Nast Travelers 2024 megaship of the year, beating out all other megaships that entered service this year. And last but not least, came the spectacular Queen Anne, Cunard's first ship in fourteen years and a beautiful addition to Queen Victoria, Queen Elizabeth, and the venerable Queen Mary 2. While new ships do command a nice premium, the vast majority of our yield growth was driven by fundamental demand improvements for the existing ships across our portfolio of world-class brands. Even excluding our new builds, 2024's yields were still up almost 10% over 2023. That's because we're achieving demand growth well above our modest supply pipeline through ground-up efforts to improve execution across the commercial space. We've been investing in both talent and tools, honing in on each of our brands' unique target markets, crafting marketing campaigns that speak directly to them. We're successfully enticing new cruise guests away from land-based alternatives. In fact, both new-to-cruise and repeat guests were each up double-digit percentages this past year. At the same time, our marketing efforts are continuing to deliver growth in web visits, natural and paid search that far outpaced our limited capacity growth, keeping the pipeline of new demand. Simultaneously, with augmenting our performance from top-of-funnel consideration to closing the deal and generating the bookings, we've been sharpening our yield management techniques to optimize our booking curve. Hire and drive ticket prices and onboard spending. While all of these efforts are already in flight and clearly working, we have even more in store to continue the momentum. We're launching new marketing campaigns across all our brands. Princess, Cunard, and Seaborn have already debuted spectacular new creatives this month. In Princess's case, its fresh take on its incomparable love boat theme featuring Hannah Waddingham of Ted Lasso fame already helped to produce record booking volumes for the Black Friday through Cyber Monday period. And stay tuned for new campaigns from Aida, Carnival, Costa, Holland America, and P&O Cruises in the UK, all launching shortly to coincide with wave season, our peak booking period. We're aggressively working to increase awareness and consideration for cruise travel globally. We're also actively working on an enhanced destination strategy to provide guests with yet another reason to take a cruise vacation with us, and that is sure to help us continue to excel. While we retain by far the largest footprint in the Caribbean with six owned and operated destinations that captured six and a half million guest visits in 2024, we believe we had a meaningful opportunity to expand and capitalize on this strategic advantage. These destinations are amongst our highest-rated guest experiences today, and we have plans to lean into these assets even further. While historically, the marketing of our own assets has really focused on the ships, we have untapped potential to create demand for these amazing destination experiences. I have never been more excited about these prospects. As we begin to unfold this multiyear strategy with the opening of Celebration Key in just about six months, this will be by far our largest and most carnival-centric destination in our portfolio with five awesome portals built for fun, from family-friendly to exclusive beach club experiences. Not only will Celebration Key be the closest destination in our portfolio, saving fuel costs and reducing greenhouse gas emissions, the only way you can get to Celebration Key is on one of our cruises. Moreover, we just recently announced a change that signals more about the shift in our destination asset strategy. Half Moon Key, the highly rated and award-winning exclusive Bahamian destination known for beautiful beaches and crisp clear waters, is being renamed Relax Away Half Moon Key to better reflect the experience guests can expect as they are immersed in this tropical paradise. Enhancements, lunch venues, a variety of bars, and other features created with intentionality to reinforce this destination's natural beauty and pristine appeal. Ready in summer of 2026, a newly constructed pier on the north side will allow two ships to dock, including Carnival's XL class ships that will be able to visit the private island for the first time. We'll be positioning these jewels of the Caribbean with consumers in a way that will encourage guests to actively seek out these specific destinations offered exclusively by our brands, and many of Carnival Cruise Lines itineraries will feature both Relax Away Half Moon Key and Celebration Key, providing guests with complimentary experiences enjoying both the idyllic and the ultimate beach days. We believe developing and promoting these unique assets will help us cast the net wider and capture even more new-to-cruise demand. We're already in flight with preparation for branding and marketing campaigns for these amazing destinations with more to come in the future. As it is, for 2025, we expect to hit our 2026 EBITDA per ALBD target a full year early while raising ROIC to just shy of our 12% 2026 target. So considering all the progress we've made, without this in place, it's clear we have a tremendous amount of headroom remaining to create more demand, cultivate more guest loyalty, and capture more pricing for the incredible ship and shoreside experiences we provide our guests. At the same time, we're making meaningful progress on the sustainability front. We achieved about a 17.5% reduction in greenhouse gas emissions intensity versus 2019, on track to achieve our target of 20% by the end of 2026, a goal that was previously pulled forward by four years. Improvement hasn't just been in emission intensity levels. Despite the fact that we're over 9% larger than we were in 2019, we have actually lowered our absolute greenhouse gas emissions by almost 10% over this time. And, of course, we're also making huge strides on rebuilding our financial fortress. In under two years, we've paid down over $8 billion of debt off our peak and significantly reduced interest expense, which coupled with our improving EBITDA has improved our leverage metrics tremendously. Our current 2025 guidance will put us at 3.8 times net debt to EBITDA, closing in on our expectation to reach investment-grade leverage metrics in 2026. Again, thank you so much to each of our team members who have delivered a step-change improvement in 2024 and set us up for a fantastic 2025 and beyond. And as has always been the case and always will be, thank you so much to our travel agent partners who have contributed immensely to this success. We also appreciate the support we've received from our loyal guests, investors, destination partners, and other stakeholders. Let's not forget, these efforts were really all about the main thing, delivering unforgettable happiness to over thirteen and a half million people in 2024 by providing them with extraordinary cruise vacations while honoring the integrity of every ocean we sail, place we visit, and life we touch. With that, I'll turn the call over to David.

Thank you, Josh. I'll start today with a summary of our 2024 fourth quarter results. Next, I will provide an update on our refinancing and deleveraging efforts. Then I'll finish up with some color on our 2025 full-year December guidance. Let's turn to the summary of our fourth quarter results. Net income exceeded September guidance by $126 million as we outperformed once again. The outperformance was essentially driven by three things. First, favorability in revenue worth $77 million as yields came in up 6.7% compared to the prior year. This was 1.7 points better than September guidance driven by close-in strength in ticket prices as well as strong onboard spending. Second, cruise costs without fuel per available lower berth date or ALBD came in up 7.4% compared to the prior year. This was six-tenths of a point better than September guidance, which was worth $13 million. And third, favorability in interest expense, other income and expense, and tax expense, all of which were partially offset by higher fuel prices, netted to a $38 million improvement. Per diems for the fourth quarter improved over 5% versus the prior year, which I would remind you were up over 10% last year, with improvements on both sides of the Atlantic driven by higher ticket prices and improved onboard spending. Strong demand allowed us to once again report records, delivering fourth-quarter record revenues, record yields, record per diems, record adjusted EBITDA, and record customer deposits. Next, I will provide an update on our refinancing and deleveraging efforts. Our full-year 2024 yield improvement of 11% was over three times our 3.5% cost increase. This drove improved margins and cash flow, which resulted in our strong EBITDA of $6.1 billion and cash from operations of about $6 billion. All of this propelled us on our journey to pay down debt and proactively manage our debt profile. During 2024, we made debt payments of over $5 billion, which included opportunistically prepaying over $3 billion of debt, reducing secured debt, removing the secured second lien layer from our capital structure, and paying off some of our more expensive debt. We ended 2024 with $27.5 billion of debt, over $8 billion off the January 2023 peak. Our leverage metrics continued to improve in 2024 as our EBITDA continued to grow and our debt levels continued to shrink. We achieved a 4.3 times net debt to EBITDA ratio, nearly a two and a half turn improvement from 2023, positioning us three-fourths the way down the path to investment-grade leverage metrics in just one year. With the benefit of well-managed near-term maturity towers and improved leverage metrics, we expect to opportunistically capitalize on improved interest rates while proactively managing our maturity towers for 2027 and beyond with various refinancings. Now I'll finish up. On top of 2024's 11% yield growth, we are expecting to deliver strong 2025 yield improvement with our guidance forecasting an increase of over 60 cents per share when compared to 2024. The strong improvement in 2025 yields is a result of an increase in higher ticket prices, higher onboard spending, and to a lesser degree, higher occupancy, with all three components improving on both sides of the Atlantic. We are well-positioned to drive 2025 ticket pricing higher with significantly less inventory remaining to sell than the same time last year. Now turning to cost. Cruise costs without fuel per ALBD are expected to be up approximately 3.7%, costing 28 cents per share for 2025 versus 2024. We are looking forward to the introduction of our game-changing exclusive Bahamian destination Celebration Key in July 2025. We anticipate that Celebration Key will be a smash hit with our guests and provide an excellent return on our investment. However, operating expenses for the destination will impact our overall year-over-year cost comparisons by about half a point. In 2025, we are expecting 687 dry dock days, an increase of 17% versus 2024, which will also impact our overall year-over-year cost comparison by about three-quarters of a point. In 2024, there were several one-time items that we benefited from, impacting our overall year-over-year cost comparisons by about a quarter of a point. The remaining 2.2-point increase in cruise costs is driven by inflation and higher advertising expense, partially offset by efficiency initiatives and further leveraging our industry-leading scale. An increase in depreciation expense and lower interest income is partially offset by an improvement in interest expense from our refinancing and deleveraging efforts for a net impact of $0.04 per share. The net impact of fuel price and currency is expected to favorably impact 2025 by approximately $0.04 per share, with fuel prices favorable by approximately nine cents per share, while the change in foreign currency exchange rate goes the other way by five cents per share. Let's not forget that the European Union allowance or EUA regulation in 2025 increases to 70% of carbon emissions from 40% in 2024. As a result, we would expect the impact of higher EUA costs on our year-over-year fuel expense to be about $0.03 per share. In summary, putting all these factors together, our net income guidance for the full year 2025 is over $2.3 billion, an improvement of more than $400 million versus 2024 or 28 cents per share. Robust demand for our brands and continued operational execution is driving our strong financial results along with our increased confidence in achieving investment-grade leverage metrics during the next couple of years as we move further down the road rebuilding our financial fortress while continuing the process of transferring value from debt holders back to shareholders. Now operator, let's open the call for questions.

Certainly. We'll now be conducting a question and answer session. First question today is coming from Matthew Boss from JPMorgan. Your line is now live.

Great. Thanks. And congrats on another great quarter. Thank you very much, Matt. So, Josh, could you elaborate on the foundation that you've laid over the last two years which you think has positioned the company to capitalize on the current demand that you're seeing? And with 2025 shaping up to be another banner year, could you speak to initiatives across the organization to take share, optimize yields, and drive onboard spending in 2025 and beyond?

Yep. Thanks for the question, Matt. I guess if we look back at the last two years, probably the biggest thing was just doing a bit of restructuring as we've talked about in the past and getting the right leaders in place, leading the brands, and those leaders are a fantastic group of people leading fantastic brands. On the commercial focus side, which we've been talking about for the last few years, right, it is scrutiny expectations around how we're improving in the revenue management space, in the marketing space, considerations at top-of-funnel stuff all the way down to closing the bookings. The amount of advertising that we've ramped up really just to get us closer to where the rest of the market is, I think it's helping to pay dividends. You know, everything from making sure our brands have great relationships with the trade to investing in our own capabilities. Probably the last thing about the foundation would be the portfolio management. You know, we've been actively managing the portfolio and allocating ships differently, moving vessels, winding up a brand in the case of P&O Australia. I think it's setting ourselves up to really put the assets where the highest returns are in the immediate term while we help all the brands who aren't yet where I think they should be get to those levels. So with respect to 2025 and what are the things that we got that are gonna continue our progress, you know, at a base level, it's a continuation of all those things in the commercial space and having those great brand leaders really lean in even further. You know, we're investing in our people. We're investing in our tools, our revenue management tools to make sure that we are utilizing the technology effectively to optimize the yields. The destination strategy that you already heard in the prepared remarks, I think that's gonna be a tailwind continues for a really long time, and we're really looking forward to that. As far as the OBR onboard spending, you know, we've got runway there. I mean, we've got a good amount of runway to continue the progress we've been making around pulling forward the spend as everybody knows opens up the second wallet and the more people spend before they get on the cruise, the more they spend on the cruise. So our brands are, again, working hard to continue that, and we're nowhere near what the cap could be on those types of efforts. So I'm pretty enthusiastic as you could probably tell.

I can tell. I can tell. And then David, maybe just quick. If you could just break down net cruise cost ex-fuel components and that 3.7% for this year. But I think more so, how best to think about maybe a reasonable spread between yields and cruise cost multiyear. If there's maybe a back-of-the-envelope rule of thumb multiyear.

Yeah. So I did my notes talk about the 3.7% because just briefly, the expenses relating to Celebration Key were a half a point. Increase in dry dock days was three-quarters of a point. I also said about a quarter of a point was the one-time items that we benefited from in 2024. And then the remaining 2.2 points really was a combination of inflation and higher advertising that Josh mentioned, partially offset by efficiency initiatives and other leveraging, you know, our scale throughout the company. So those are really the four key components, and it's up to 3.7%. As far as the difference, you know, I don't think there's any rule of thumb here. I really do believe we can, you know, continue as you saw, in 2024, it was three times, but that was a recovery story. Our guidance has a half a point difference between the yield improvement and a cost improvement. Keep in mind that a point to yield is worth, you know, almost double what a point of cost is. So there is leverage there in and of itself. But we will work hard to continue to maintain our cost consciousness. And as Josh talked about, you know, all the things we're investing in in advertising and revenue management should help drive yields higher over time as well as the continued improvement in margins.

Great color. Best of luck.

Hey. Thanks for taking my questions. Celebration Key looks pretty exciting opening up later this summer. Do you think you are in the customer awareness of this product? Like, do you think it's well understood, appreciated, by customers? Or is it still or is that marketing kind of, like, and then and awareness still ramping and then thanks.

Sure. Thanks, Ben. I definitely still ramping. I mean, it doesn't exist yet. So we are definitely building momentum. We're building excitement. We're getting the response that we expected with respect to how the bookings are shaping up, which is good to see. But it's still early days. I think the really exciting part is once we're in there really operating and having guests enjoy these experiences and optimizing what we do and how we do it, it takes off from there because right now it's make-believe. So we gotta let everything get in place, and then I think it'll help tremendously.

Got it. Understood. And then in the release and call transcript, you referenced an enhanced destination strategy. Can we open this up a little bit? Does this refer to Celebration Key? Is this a little bit of a teaser to additional opportunities to provide guests with differentiated, you know, Carnival-owned operated destinations? I know you mentioned the Pier at Half Moon Cay, I believe. Just trying to understand the magnitude and direction of the strategy. Thanks.

Yeah. So let's take a step back from any one particular destination. I think what I've seen for a long time now for several years, and I think some are doing better than others, and better than us, is turning their own destinations into something that not only guests but non-cruisers look at and decide that's gonna help tilt my vacation decision to take a cruise. Because the destination itself looks amazing, is an amazing experience, I can only do it on a cruise. And we have not historically, I think, done a good enough job in raising the level of awareness of the amazing destinations that we have and that are in the pipeline. So when it comes to Celebration Key, we're getting a head start because we're doing it before the location exists. When you think about the change to Relax Away for Half Moon Cay, it is beautiful. It is one of the most stunning destinations in the world. And yet, if you're not a cruiser, you don't know anything about it. You're not looking for it. And we're gonna change that dynamic. And with Relax Away, what we're trying to convey to people who don't cruise is really the vibe of the experience that they can get. And the great thing about it is we're leaning into that natural beauty, which is going to be different from Celebration Key. Celebration Key, as we said, that is the ultimate beach day. Right? Relax Away is all about the idyllic. It's being in a tropical paradise, and we're gonna be able to marry those two things together. So people on the same cruise will be able to get both experiences that are very, very different and exclusive to us. And so we're gonna raise our game there. There's more things that we can do without heavy investment with some of the destinations that we own to make that part of that more exclusive collection. So early days, but we're pretty excited about it.

Yeah. Hey, guys. Good morning. Happy holidays to all you guys. So Josh or David, if we think about the yield guidance for 2025, just based on the fact that you're two-thirds booked already for next year, it seems like you have strong pricing momentum across pretty much all your geographies. I know you'll hate that I'll say this, but it seems like the approximate 4% yield guidance might end up being conservative when we have this same call a year from now. So I guess the question is, can you give us color around the makeup of that yield forecast? And maybe, Dustin, it seems like you could be taking a conservative view around whether it's onboard trends, whether it's the close-in pricing opportunity. And if I ask that question the other way, I mean, if we think about your initial yield guidance last year, which I think was 8.5% and it ended up closer to about 11%, what did you guys underestimate for 2024? Thanks.

Hey, Steve. Well, first of all, we were a little worried you weren't first in the queue, so we were gonna literally call 911 to make sure you were okay. So glad to hear your voice. All good. Good. Good. Good. You know, look, our goal is to give guidance based on what we know. And it's certainly something that we want to meet and obviously work hard to exceed. Last year, I meant what I said in my prepared remarks. I think it was a fantastic year by the whole team. That outperformance was, I would argue, pretty special. And, you know, also argue that 250 basis points of yield on top of a base of 8.5% proportionally is not 2.5% on top of 4.2%. So we have a very good handle, I think, on where we are today. Much more so than last year even because we're already back up in full occupancy percentage more or less that we always get. If you remember, the first half of the year, we still catch up, which is like five points of our improvement in yields last year. Was occupancy. I think we're in a more stable place than we were. You know, well, the onboard spends have been fantastic. There's no doubt about it, and we're working hard to continue that trend. And when you look at the 4.2%, you know, there's a little bit for occupancy, but it's all price. Right? Outside of a little bit of occupancy, it's price, and it is a combination of the ticket side and the onboard spot continuing. And we'll work hard to optimize as much as we can. I promise you, our goal is the same as yours. Is get as much revenue as we can.

Hey. Good morning. So I wanted to ask maybe a big picture question. Obviously, not a whole lot of capacity being added here, and so much of the growth story is organic, obviously. And so I guess my first question is, how much of that organic turnaround do you think it's a function of sort of factors taking place in the industry versus, I don't know, self-help? Right? You listed obviously a whole bunch of things that you're doing brand by brand. I'm ultimately trying to figure out sort of the sustainability of this organic growth that we're seeing right now.